Thursday, May 28, 2015

Paul Singer Tips the Elite's Hand

Have you noticed the parade of big names coming out warning of a coming financial calamity? It is pretty steady now that big names in finance show up on television or in a news report and say, "Well, jeez, a storm is coming and it will be awful". A recent man warning of doom is Paul Singer. If his name sounds familiar, I have written of him before. Over a year ago, I wrote about Singer's efforts to use his money to make the GOP pro-gay. He is a FIRE economy elite with billions. Comapred to the other masters of the universe proclaiming doom, Singer has described the play: short long term claims on paper money.

The big short prior to the financial crisis was shorting subprime mortgages. This is an even bigger short. This is shorting government bonds in the West. Zero Hedge lays out the specifics. This play goes to the heart of the problem and is two pronged. If you short government debt with their printing presses, you would be paid in a currency that would become worthless. You are right, but you do not get paid. In the meantime, if you are shorting bonds that have negative yields, you actually have a positive carry. Singer's play would mean that you need to short the money system and prepare for the next. As Zero Hedge closes out their giant post, there is one alternative to paper money claims that is used for measuring wealth in a financial system. Gold. Singer's approach becomes a paired trade in essence, short bonds and long gold. Bill Cara also called this the trade of a generation almost a decade ago, but he was too soon. Timing is everything.

I am a bit biased as I am a fan of gold and have been for years. If a skeptic, just look at it this way. Every central bank that can do so is buying gold like a major change is coming or they are asking for their gold to be repatriated back home for safe keeping. Now big names in finance are discussing the need for gold. Large institutions and people are preparing for the next stage, and if they are revealing it to you now, they have been doing it for much longer. Our central banks will fear deflation, but they will print to make sure it never happens. Sadly, the printing will accelerate and make that paper worth less and less. Be prepared.


Suburban_elk said...

I once was rather prosperous
there was nothing i did lack
14 carats in my mouth
and silk upon my back

But i did not recognize my brother
i carried him to blame
for this one single crime
i had to walk away in shame

That is what Bob Dylan said about money. I used to have money but it all went done got spent.

To get all preachy, money is its own end. A person has to spend his time and energy safeguarding it.

As with international relations, finance is difficult. I am kind of an idiot. As a child i suffered a compound skull fracture on the forehead, a broken occipital ridge across the frontal lobe, what a drag.

Can i tell you something else? i scored repeatedly in the top 5 and 10 in those high school math contests, and this was in MN in the 80s, i reckon that puts my iq at 160. However my NSA score is 149, but i was already off-track.

Bixxy Noodles said...

If you look at their transaction histories, central banks tend to buy gold high and sell it low.

Anonymous said...

Paul Singer is Argentina's enemy'número uno, a real vulture.

Portlander said...

Yeah, when you start adding up the unfunded pension liabilities at the state level it's almost comical. Logically it could only end in hyperinflation.

On the other hand, hyper-inflation wipes-out lenders just as certainly as deflation, albeit by the opposite mechanism: in the former lenders are paid back in worthless scrip. In the latter they get "paid back" in worthless collateral.

Who runs the Fed? Lenders. What do billionaires do with their money? Lend it.

What has everyone been afraid of for going on 8 years now? Hyperinflation. It just seems too obvious.

Of course, I'm still sweet on my currency strike protest. I think it would take some minimum 20 hrs a week blogging/marketing the idea to build up enough credibility to get people to feel like there's a real bandwagon here worth joining. Not sure I have 20hrs a week to devote to it. Thoughts?

rickyvaughnblog said...

Financial crises are a good thing for the financial elite. They can position themselves to prosper in a crisis and buy up distressed assets on the cheap. You have to wonder about the nature of these crises, and if wildly swinging business cycles are a long con perpetrated by some of our more bookish allies who dominate finance and government. With insider (Fed) information, one could ride these booms and busts to riches and buy up much of America.

Portlander said...

What about a financial crisis that is not of their own making?

Again, we in the cheap-seats don't think about it this way, but billionaires are leveraged up to the hilt just like the whole rest of the system. That leverage is their Achilles' Heal.

GFC said...

Never let a crisis go to waste.

Portlander, they are counting on retaining possession of actual things of value when the house of cards comes tumbling down, including the government and especially its armed enforcement arm. Then when it's time to rebuild, they will ensure their status and position in society remains intact, or is even improved. It's everyone else who will suffer tremendously, and if you don't like it, Uncle Sam will try to kill you until you change your mind.

eah said...

I am a bit biased as I am a fan of gold and have been for years.

What exactly does that mean? Do you invest in Au or miners of Au? Both of those have been very, err, unprofitable investments over the last few years.

There is an old saying: Wall St graveyards are littered with the corpses of people who were right too soon.

And I am not at all sure that you and other 'fans of Au' are or will be right. Whether or not Au has been a profitable investment depends very heavily on the time period you talk about. Meaning it is not a buy and hold type asset (whereas you can make a strong argument that stocks are - at least a robust portfolio of dividend-paying stocks).

But I am sure that the Ponzi paper money scam, including foremost the way sovereign nations with their own currencies are forced to borrow money into existence and then pass the debt onto their kids, will collapse via massive defaults at some point. That does not mean I am interested on owning Au, however.